Segment information

Effective the first quarter of 2016, we are reporting our financial results within the following business segments: North America Commercial P&C Insurance, North America Personal P&C Insurance, North America Agricultural Insurance, Overseas General Insurance, Global Reinsurance, and Life Insurance. We have also redefined Corporate to include all run-off asbestos and environmental (A&E) exposures, the results of run-off Brandywine business, the results of Westchester specialty operations for 1996 and prior years and certain other run-off exposures. All legacy ACE prior period amounts (i.e., legacy Chubb Corp prior period results are not included in the prior period amounts in the tables below) have been adjusted to conform to the new segment presentation.

•

The North America Commercial P&C Insurance segment includes the business written by Chubb divisions that provide property and casualty (P&C) insurance and services to large, middle market and small commercial businesses in the U.S., Bermuda and Canada. These divisions write a variety of coverages, including traditional commercial property, marine, general casualty, workers’ compensation, package policies, and risk management; specialty categories such as professional lines, marine and construction risk, environmental and cyber risk, excess casualty, as well as group accident and health (A&H) insurance. This segment includes our North American Major Accounts and Specialty Insurance (principally large corporate accounts and wholesale business), and the North American Commercial Insurance divisions (principally middle market and small commercial accounts).

•

The North America Personal P&C Insurance segment includes the business written by Chubb’s North America Personal Risk Services division, which comprises Chubb high net worth personal lines business and ACE Private Risk Services, with operations in U.S. and Canada. This segment provides affluent and high net worth individuals and families with homeowners, automobile, valuables, umbrella and recreational marine insurance and services.


•	The North America Agricultural Insurance segment includes the business written by Rain and Hail Service, Inc. which provides comprehensive multiple peril crop and crop-hail insurance, and Chubb Agribusiness, which offers farm and ranch property as well as specialty P&C coverages, including commercial agriculture products.

•

The Overseas General Insurance segment includes the business written by two Chubb divisions that provide P&C insurance and services in the 51 countries outside of North America where the company operates. Chubb International provides commercial P&C traditional and specialty lines serving large corporations, middle market and small customers, A&H and traditional and specialty personal lines through retail brokers, agents and other channels locally around the world. Chubb Global Markets provides commercial P&C excess and surplus lines and A&H through wholesale brokers in the London market and through Lloyd’s. These divisions write a variety of coverages, including traditional commercial property and casualty, specialty categories such as financial lines, marine, energy, aviation, political risk and construction risk, as well as group A&H and traditional and specialty personal lines.


•	The Global Reinsurance segment primarily includes the reinsurance business written by Chubb Tempest Re as well as the legacy Chubb U.K. Assumed Reinsurance business, which is active, and the legacy Chubb run-off Reinsurance business.


•	The Life Insurance segment includes the business written by Chubb Life, Chubb Tempest Life Re and Combined Insurance’s North America operations.

Corporate primarily includes loss and loss expenses of asbestos and environmental (A&E) run-off liabilities, and the results of our non-insurance companies including Chubb Limited, Chubb Group Management and Holdings Ltd, and Chubb INA Holdings, Inc. Our exposure to A&E claims principally arises out of liabilities acquired when we purchased Westchester Specialty in 1998, CIGNA’s P&C business in 1999, and legacy Chubb Corp run-off business in 2016, and certain other run-off exposures.

In addition, revenue and expenses managed at the corporate level, including realized gains and losses, interest expense, the non-operating income of our partially-owned entities, amortization of purchased intangibles, Chubb integration expenses, and income taxes will be reported within Corporate. The amortization of purchased intangibles includes amortization of agency distribution relationships and renewal rights, internally developed technology, and the fair value adjustment on acquired loss reserves. Also the amortization of fair value adjustments on acquired invested assets and debt associated with the Chubb Corp acquisition is considered a corporate cost and is therefore included in Corporate. These items will not be allocated to the segment level; therefore, the segment income statement will only include underwriting income, net investment income, and beginning with the second quarter of 2016, other operating income and expense items such as each segment's share of the operating income (loss) related to partially-owned entities and miscellaneous income and expense items that the segments are held accountable for. We determined that this definition of segment income is appropriate and aligns with how the business is managed. As we progress through the integration and refine our processes, we may continue to further refine our segments and segment income measures. The prior periods have been adjusted to conform to the new segment presentation. Chubb integration expenses are one-time in nature and are not related to the on-going business activities of the segments. The Chief Executive Officer does not manage segment results or allocate resources to segments when considering these costs and they are therefore excluded from our definition of segment income.

For segment reporting purposes, certain items have been presented in a different manner below than in the consolidated financial statements. Management uses underwriting income as the main measure of segment performance. Chubb calculates underwriting income by subtracting Losses and loss expenses, Policy benefits, Policy acquisition costs, and Administrative expenses from Net premiums earned. To calculate segment income, include net investment income and other (income) expense. For the North America Agricultural segment, management includes gains and losses on crop derivatives as a component of underwriting income. For example, for the three months ended June 30, 2016, underwriting income in our North America Agricultural Insurance segment was $14 million. This amount includes $2 million of realized losses related to crop derivatives which are reported in Net realized gains (losses) in the Corporate column below.

The following tables present the Statement of Operations by segment:



	North America Commercial P&C Insurance			North America Personal P&C Insurance		North America Agricultural Insurance		Overseas General Insurance			Global Reinsurance			Life Insurance		Corporate			Chubb Consolidated
For the Three Months Ended
June 30, 2016
(in millions of U.S. dollars)
Net premiums written	$	3,245		$	1,231	$	375	$	2,031		$	230		$	527	$	—		$	7,639
Net premiums earned	3,148			1,140		327		2,093			185			512		—			7,405
Losses and loss expenses	1,971			661		284		1,089			87			147		15			4,254
Policy benefits	—			—		—		—			—			146		—			146
Policy acquisition costs	545			269		25		537			47			137		—			1,560
Administrative expenses	299			98		2		277			14			77		62			829
Underwriting income (loss)	333			112		16		190			37			5		(77		)	616
Net investment income (loss)	468			55		5		147			65			69		(101		)	708
Other (income) expense	(9		)	3		—		(5		)	(2		)	—		(16		)	(29		)
Segment income (loss)	810			164		21		342			104			74		(162		)	1,353
Net realized gains (losses) including OTTI																(216		)	(216		)
Interest expense																153			153
Amortization of purchased intangibles																5			5
Chubb integration expenses																98			98
Income tax expense																155			155
Net income (loss)																$	(789	)	$	726



	North America Commercial P&C Insurance		North America Personal P&C Insurance			North America Agricultural Insurance		Overseas General Insurance			Global Reinsurance		Life Insurance			Corporate			Chubb Consolidated
For the Three Months Ended
June 30, 2015
(in millions of U.S. dollars)
Net premiums written	$	1,428	$	547		$	379	$	1,669		$	261	$	500		$	—		$	4,784
Net premiums earned	1,419		269			321		1,644			220		487			—			4,360
Losses and loss expenses	916		156			271		816			72		137			49			2,417
Policy benefits	—		—			—		—			—		153			—			153
Policy acquisition costs	131		(1		)	23		396			60		118			—			727
Administrative expenses	154		34			4		254			13		74			45			578
Underwriting income (loss)	218		80			23		178			75		5			(94		)	485
Net investment income	262		7			6		139			79		66			3			562
Other (income) expense	1		—			1		(4		)	—		(7		)	(29		)	(38		)
Segment income (loss)	479		87			28		321			154		78			(62		)	1,085
Net realized gains (losses) including OTTI																126			126
Interest expense																71			71
Amortization of purchased intangibles																55			55
Income tax expense																143			143
Net income (loss)																$	(205	)	$	942



	North America Commercial P&C Insurance			North America Personal P&C Insurance		North America Agricultural Insurance			Overseas General Insurance			Global Reinsurance			Life Insurance		Corporate			Chubb Consolidated
For the Six Months Ended
June 30, 2016
(in millions of U.S. dollars)
Net premiums written	$	5,547		$	2,102	$	439		$	4,072		$	431		$	1,043	$	—		$	13,634
Net premiums earned	6,044			2,164		350			4,048			387			1,009		—			14,002
Losses and loss expenses	3,718			1,322		254			2,110			176			324		24			7,928
Policy benefits	—			—		—			—			—			272		—			272
Policy acquisition costs	1,027			518		29			1,040			100			259		—			2,973
Administrative expenses	565			186		(2		)	540			28			149		135			1,601
Underwriting income (loss)	734			138		69			358			83			5		(159		)	1,228
Net investment income (loss)	894			102		10			293			132			136		(185		)	1,382
Other (income) expense	(9		)	4		—			(10		)	(3		)	6		11			(1		)
Segment income (loss)	1,637			236		79			661			218			135		(355		)	2,611
Net realized gains (losses) including OTTI																	(610		)	(610		)
Interest expense																	299			299
Amortization of purchased intangibles																	12			12
Chubb integration expenses																	246			246
Income tax expense																	279			279
Net income (loss)																	$	(1,801	)	$	1,165



	North America Commercial P&C Insurance			North America Personal P&C Insurance		North America Agricultural Insurance		Overseas General Insurance			Global Reinsurance			Life Insurance			Corporate			Chubb Consolidated
For the Six Months Ended
June 30, 2015
(in millions of U.S. dollars)
Net premiums written	$	2,725		$	680	$	467	$	3,463		$	534		$	991		$	—		$	8,860
Net premiums earned	2,799			415		385		3,281			446			961			—			8,287
Losses and loss expenses	1,831			267		293		1,630			171			289			58			4,539
Policy benefits	—			—		—		—			—			295			—			295
Policy acquisition costs	261			30		19		785			114			225			—			1,434
Administrative expenses	305			53		3		510			25			147			89			1,132
Underwriting income (loss)	402			65		70		356			136			5			(147		)	887
Net investment income	520			12		12		277			154			132			6			1,113
Other (income) expense	(2		)	—		2		(6		)	(1		)	(16		)	(50		)	(73		)
Segment income (loss)	924			77		80		639			291			153			(91		)	2,073
Net realized gains (losses) including OTTI																	37			37
Interest expense																	139			139
Amortization of purchased intangibles																	85			85
Income tax expense																	263			263
Net income (loss)																	$	(541	)	$	1,623

Underwriting assets are reviewed in total by management for purposes of decision-making. Other than goodwill and other intangible assets, Chubb does not allocate assets to its segments.